Ireland may have ‘over-corrected’ on financial regulation, US regulator warns

Ireland may have over-corrected how it regulates banks and financial services firms and should be “very careful” with further regulations to avoid losing business overseas, one of five commissioners at the US Securities and Exchange Commission, the country’s markets regulator, has warned.

Daniel Gallagher, one of two Republican commissioners at the SEC, said regulatory change has been "pretty intense" over the last three years in response to the financial crisis and that this should be reviewed before further regulations are introduced.

“At some point it’s got to stop and people need to evaluate what is the impact globally and domestically; I think Ireland has hit that point,” he said.

Speaking in Washington ahead of his arrival in Ireland today to speak at a European corporate governance conference, Mr Gallagher said the crisis meant it was “appropriate” to overhaul regulation but that over-regulation had to be avoided.

Spectre
"I do think you need to keep tabs on whether it is too much because you could really face the spectre of losing big chunks of an industry that is very important to Ireland," he said.

He echoed comments by former Taoiseach John Bruton, now ambassador for the IFSC, and AIB deputy chairman Michael Somers who last week warned about the consequences of regulation going too far.

Empathised
Mr Gallagher said that he empathised with the departing financial regulator Matthew Elderfield who said last week that arguments for less regulation should be given "short shrift" if they were a "vaguely articulated concern" about burden.

“He was brought in at a tough time. There was a lot of public outrage and he had to show toughness. I do think he understands the competitive issues,” said the SEC commissioner of Mr Elderfield.

“At the same time my guess is that he doesn’t want folks to forget the depths from which they came a few years ago and journey back there.”

Mr Gallagher warned that if the UK opted out of new pan-European regulations of financial services it could “stifle” what made certain countries like Ireland special.

“It would certainly be disruptive if Ireland was subjected to EU-wide restrictions and London wasn’t,” he said.